Tēnā koutou katoa. Welcome to this Alan and Clark webinar, Demystifying Operating Models. My name is Charlene Harvey and it's my pleasure to welcome you today.
For some of you that are, this is your first time joining us, so you may not be familiar with Alan and Clark. We're an Australasian-based consultancy dedicated to making a positive impact on communities throughout Aotearoa, Australia and the Pacific. We specialise in strategy, change management, programme delivery, policy and regulation, research and evaluation, just to name a few.
As an organisation, we give a damn about empowering our clients to overcome society's biggest challenges, which is why we regularly run these free webinars and create desk guides and provide expert advice wherever we can. Right, intros. Let's do some quick introductions.
So Anton, would you like to kick us off? Kia ora, Charlene. Ka mihi te nui ki a koutou. Ko Anton Davis tōku ingoa.
He uri ahau no Ngāti Raukau ki te Tonga, Ngāti Rangiwewehi, Ngāti Hei me Ngāti Porou ki Hauraki hoki. So everyone, I'm Anton Davis. I'm really happy to be here with you today.
I have a particular interest in collaborative operating models. Looking forward to hearing some of your pātai throughout the course of our korero today and yeah, hopefully have some insights to share with you. Nō reira, tēnā tātou katoa.
And as I mentioned earlier, I'm Charlene Harvey and I'm the Regulatory Strategy and Practise Lead here at Allen & Clark. So Anton and I have got the great privilege and have had the great privilege to actually work with a lot of clients around their operating models and the term operating model is something that is bandied around, commonly misunderstood and what we want to unpack for you today is understanding what an operating model is, highlight some of the key benefits when you're designing, formalising, refreshing or simply better understanding your own organisation's operating model and share with you some of our tips and tricks for when you are refreshing or reviewing or designing your own operating model. Okay, let's start at the beginning.
So Anton, how would you define an operating model? Okay, so an operating model is literally that. It's a model that seeks to depict how an organisation operates. If strategy answers the question of why an organisation exists, what it's trying to achieve, then an operating model addresses the question of how it's going to do that.
Sometimes they're described as the blueprint of how an organisation operates to deliver on its strategy. Operating models are also often described as the bridge between strategy and execution. There's a lot of research out there that indicates that a lot of strategies or organisations fail to effectively implement the strategies and that's often because there's a disconnect or a gap between the strategy, the subsequent planning and implementation.
That means or often there's not enough rigour around translating what those high-level concepts in the strategy are intended to mean and there's not enough intentional design of how the organisation is intended to operate as a whole. So then what we see is different departments and teams within the organisation interpreting the strategy differently, developing their own plans, their own ways of working and we start seeing what arises as a result is a lack of strategic and operational alignment. That's because there's no blueprint as to how the organisation will operate as a whole and that's where the operating model offers huge benefits and fits into that planning hierarchy that you can see in the slide.
They provide the translation and the guide rails for how the organisation operates. They promote the cues for the planning that needs to take place and the alignment of the implementation effort. So staff have greater understanding about how they're going to operate and work together across the organisation to deliver on the strategy.
One of the things that's often forgotten about or lost in conversations about operating models and design is that we forget that organisations are really complex. They are comprised of many different components and moving parts. They can involve lots of different groups of people conducting a range of functions and activities who are leveraging different methodologies, different tools, different resources.
So organisations are dynamic and complex organisms. The discipline of contemporary design of an operating model allows organisations to distil those complexities, conceptualise how the different component parts are best designed but also how they fit together to become the effective whole. I think it's really important also to understand that operating models can be designed for public sector organisations or private sector organisations.
They can be designed for large organisations or small organisations. Designed and processes facilitated for the whole organisation, the whole entity or even a business group or a functional group. So as I mentioned earlier on, I have a particular interest around collective impact and how organisations work together.
So operating models can be designed at a whole or system level as well. So there are quite a few criticisms that we hear about operating models. You've probably heard them yourself.
You might be thinking them right now and just to front foot it, we've thrown the main ones that we hear onto the slide which you'll see. Now in terms of the first point, hopefully you'll now have a sense of what an operating model is and if you don't, hopefully we're committed to making sure that you really know what an operating model is by the end of this webinar. But to the second point, this is really, really common.
A lot of people's exposure to what an operating model is comes at the back end of a restructure. And as consultants, we're often approached by clients to support them to develop a new operating model only to discover pretty early on that what they really want is an organisational structure. Now that's not what an operating model is.
It's a lot richer because it's focused on the whole and how does the whole operate. And so the structure is just one component of the operating model. Now another criticism is that operating models can be quite conceptual.
So this is where people say that the operating model is just the picture that's just in front of them. But actually the way that you make operating models come to life is really, really critical. So the artefacts that you produce should explain the concepts and really help staff engage with them.
The diagrammatic representations and the accompanying narrative should increase the accessibility and further bring the concepts to life. Sometimes operating models are touted as the magic bullet and we just need a new operating model because that'll fix all the challenges and criticisms and it'll answer everyone's questions with the new operating model. They aren't a magic bullet and they won't solve all your problems.
So we tend to think of operating models as a strategic tool and just like any other strategic tool, you need to be really mindful of who is it for, how is it going to be used, how is it going to be implemented, how is it going to be communicated and to whom and for what purpose and what value will they see in it. I say this because it takes away the focus from just the creation of a document or an artefact to the beginning to think about how you even start thinking about reviewing or designing an operating model as the process itself. The process of designing an operating model is a deliberate consideration of each of the components and the conversation that goes around it and the process is a real mechanism for change and it's just as valuable as the outputs.
The outputs itself will give you an evidence base, a rigour around how you operate and why. So you want to make sure that you're taking the time and consider that the actual review or development of a new operating model is a process. I wanted to make this really clear because one, if you're about to embark on reviewing an operating model or designing an operating model, you're going to come up across these criticisms but also I wanted to reinforce the designing of an operating model is not just around filling in a picture or a template.
Yeah I think that's a really important point actually. I think that the schematic reference that you made, the risk there is that you're thinking about an operating model in a really one-dimensional way but the process affords you the opportunity to create a much richer understanding across the organisation and if you create that base understanding then you're putting people in a position to innovate, to find ways to improve, to operate more effectively. So I agree 100% with those notions and ideas.
I think it's also worth noting that if organisations aren't adopting the discipline of formalising the ways that they operate, they're not capturing and designing intentionally the ways that they're going to operate, then I think they're potentially missing out on a range of the benefits that are potentially available. Those benefits include things like increasing value creation, increasing impact, improving operational efficiencies, improving reputation and creating greater social licence even in some cases. So really important set of benefits that are potentially available.
We've summarised a range of those benefits in the slide that you should see on the screen now and I'm not planning to go through them all with you but there were two in particular that I just thought I'd touch on really lightly. The first one is around the alignment of people and this is really important. It's one of the greatest benefits that I think the OPT models offer and that is aligning people in terms of their understanding of what it is the organisation is trying to achieve but how they go about achieving it.
Importantly I think operating models can provide people with line of sight about their role within the organisation and then the contribution they make towards that strategy. The alignment piece is also getting everybody on the same page and understanding how they work together. So the alignment piece really significant benefit that's available.
The second point that I just wanted to touch on is around the integration of operations. So this is another really important opportunity to be intentional around the way you design the different processes, the different functions and really architecting the interfaces between different functions and I say that because the emergence of silos or siloed activity within organisations is one of the most common problems or challenges that we hear about and the operating model provides you with an opportunity to engineer things in such a way as to avoid those silos emerging to create the common understanding about how you can get integrated and cohesive operations happening across different functions and different teams and at the organisation as a whole level. In summary I think you know a lot of benefits in there.
One of the key ones though with that increased intimate knowledge that executives in particular can have of the organisation is that you improve their ability to navigate and manage change, you can improve the organisation's agility as a result. In today's environment I think that's really important. So what happens when you review an operating model or even design a new one is being really deliberate around the components required to deliver your strategic direction.
You know as Anton said earlier it's all about the how. Now there are various frameworks and thoughts around what should be included when you're thinking about redesigning an operating model and you'll see lots of different pictures and potential templates that you can use around what an operating model is but what I want to reinforce is the value and the benefit of an operating model is the narrative and the connection and the alignment between all the different components. Now at Allen & Clark we use our own bespoke methodology the four lenses which Anton will go into a little bit later on in the webinar but basically when you're designing an operating model you want to decide what value you want to add, how you're going to mobilise resources around it, what capabilities are going to be required to deliver that value and what are the ways of working and the culture and the people elements that will underpin it.
So typically the components that you'd expect to see in an operating model are the value proposition, some kind of description of the core capabilities, a description of the key processes and workflows, the infrastructure used to support operations and then some people components so how are people and operations organised and managed and then most importantly how do all the components effectively work together. To make this a little bit more practical and real we've thrown an example of two similar services on the slide so taxis and Uber. You know we've articulated on the slide the different components of their respective operating models and if you look at each of their each of their components you'll see how they cascade their value proposition through each of those components and how collectively those components create a cohesive approach.
So if you look at Uber, so Uber's operating model is primarily technology driven and it emphasises flexibility and convenience and you have an approach which is all based around a mobile app you know and it's the app that creates the interaction between drivers and customers whereas a traditional taxi model or taxi companies rely on fixed pricing structures, regulated professionalism and the taxi company is the mechanism and the main interaction point between drivers and customers. Now at first blush you'd think you know how different could the two operating models really be you know in fact you know they could be quite similar you know a ride is a ride but when you start to unpick the components they're actually quite fundamentally different. Yeah so in that notion of a ride is a ride what are the differences in terms of the strategic capabilities that the two approaches deploy? Yeah so as you'll see on the slide taxis you know they've got a strategic capability around you know they're managing a fleet of vehicles and they're managing their drivers.
You know Uber on the other hand is based around a technology platform and data analytics and everything is based around the mobile app. Now by choosing you know that approach you know Uber doesn't incur the costs of owning a fleet of vehicles or even the management overheads of managing the drivers which means that Uber can focus you know and on just maintaining and improving the technology platform you know and it's that which connects the drivers and the riders. If you then see what are some of the flow and effects you know you take a component like quality control now in a traditional taxi company you know quality control and safety is regulated through local laws like driver licencing and vehicle inspections and you can see how that links to the value proposition you know traditionally you know taxis market themselves and kind of brand themselves around being you know highly professional, credible, trusted whereas Uber which is basically a step removed from the delivery of the ride or service you know builds safety features into the app like trip recording or sharing the ride details with friends and family you know and quality control is through the two-way rating system of both passengers and drivers to improve the driver-passenger interaction.
You know another way to see the connection and the cohesion between all the different components that makes up the operating model if you look at Uber's value proposition so that's their unique offering to customers you know they're focused on being convenient affordable with rides on demand and if you think about the features within the app you know real-time tracking of drivers you know transparent fare display and a payment method it's all built into the app giving customers the choice and convenience around what cars they use, which drivers they use, the price they're prepared to pay so hopefully you can see the connection between all the parts to inform the operating models between the the two. You know I personally find Uber quite an interesting operating model because it is very unique and you know what started out as a you know a pretty unique idea by a couple of guys way back in 2009 because they couldn't hail a taxi at a conference and now they have about 70 percent market share and it's worth around 130 billion. Yeah it's an interesting example I think the ride share model as you've described there has actually influenced the taxi firms to then revisit and review their own operating models and you can see the adoption of technology coming through in some of the taxi services now so some some changes to their operating models coming through as well and that's probably a good segue for us to to have a little bit of a conversation around what the triggers or the prompts might be that suggest you might need to conduct a review of your own operating model.
So we've added a slide to the to the screen which highlights some of the typical indicators that often are indicators that there's a review required of the operating model and that review could be something that's quite small quite minor it could be something that is not quite gelling within the operation or the organisation some kind of operational rub or it could be something much more significant something much more substantial something that's broken or fundamentally not fit for purpose anymore. Typically when clients approach us with these kind of operational issues we apply an operating model diagnostic process to try and understand what's going on and the most common trigger and actual fact that we find is that an organisation's often developed a new strategy and is working to a new strategy but hasn't actually gone through the process of formalising or reviewing what changes it needs to make to the ways that it operates to align with the new requirements of that strategy. Sometimes it means that there's just a capability a new capability that's required that's missing other times it means that the resourcing allocation is not quite right more resources are required in one area relative to where it was historically.
So these are some of the I guess on the slide these are some of the the triggers that that warrant consideration as to whether your operating model is actually designed and configured the way it should be. Yeah the trigger that I find really interesting at the moment and the current conversation that everyone seems to be talking about is AI and you know so organisations are assessing you know what's the potential for AI within their operating model so you know how they can harness this technology what does it mean for their capability set what governance would you put around it decision making so I think you know being really mindful around even just from a review point of view keeping tabs on these triggers you know it might well it might not so for example you might not be adopting AI but you want to keep traps on what's happening within the broader market that you're operating. Yeah I agree with that that the broader market one is is really important I think the you know in our current environment we've got a tariff scenario unfolding in the marketplace at the moment and the impact of that on organisations manufacturing product and for instance China or Vietnam you know quite significant impact on their operating models and that possibly prompts a review of what options they might have so yeah I agree.
That's probably sorry an opportunity for us to maybe talk a little bit about the design side of things and the four lenses so just to share with you a little bit about our approach to designing operating models. Ideally from our point of view operating models should be understood by as many people if not all people across the organisation as possible so as mentioned earlier on a big focus for us is making the process as inclusive as possible but also that anything you produce as a result the artefacts and documents are as intuitive and logical as possible so that people can engage with the content. The overarching process that we follow is pretty simple and not necessarily rocket science but it's based around this notion and idea of map and analyse the current operating model that's in use today, analyse the things that are working well, figure out the things that are not, where there are rubs or leakage or opportunities for improvement.
The second thing or the next step in the process for us is to look at designing the target operating model or in short the TOM. So the TOM is the operating model that would be required if we wanted to make sure that we were going to deliver on the strategy and the vision that's contained in it. So to design the TOM we utilise a methodology called the four lenses and as the name suggests there are four lenses but the idea is that we focus on the design requirements through a particular lens which allows us to filter out all of the distractions, all of the complexities associated with the other three lenses and then we progressively make our way through the design process using each of those lenses.
The four lenses that we use are value, governance, capability and culture. So the first lens, value, is value and through that lens we pose the design question how will the organisation create the value required by the strategy. In other words what are the things that we need to do to generate the value that we aspire to create.
The second lens is governance and once we understand what we're going to do to create value we then pose the question how are we going to organise ourselves to create that value, how will we coordinate ourselves, how will we make decisions, how will we delegate, how will we lead, how will we communicate, how will we exercise control to ensure that we're successful in creating the value and executing on the strategy. In other words what are the governance arrangements that we need to have in place in order to be successful. The third lens that we utilise is the capability lens and having answered the question of how we're going to create value and how we'll organise ourselves to do that, we then pose the design question what are the capabilities that we need to leverage and have in place in order to be able to do those things successfully.
So for example what are the processes we need to have in place, what are the policies, what are the people that we need to have in place, what human capital, what data, what technology, what financial resources, what tools, what infrastructure etc. will we need to have in place to enable us to create the value that we're striving to create. Finally the fourth lens is culture and while it's the fourth lens it's by no means at all actually, but having considered how we'll create value, how we'll organise ourselves to do that and what tools and capability we'll deploy to do that, we then pose the design question what are the behaviours that we need to have in place in order to be successful.
In other words what are the cultural settings we need to have in place, what's the belief system that needs to underpin all of that, what's the environment that we're meeting to create to promote and foster the kind of behaviours that will lead to our success. So those are the four lenses and that's the methodology broadly speaking that we utilise. What I really like about this methodology is the fact that we always start with value and that value becomes the foundation to then interrogate each of the other lenses so it's almost like a bit of a check and balance instead of just having what could be a silo around this is the people management approach, it's what is our approach to effectively governing and managing people through a value creation lens and then I think what's really nice is then when we collectively look at all those different components and weave together kind of a cohesive story that becomes your operating model that is easily digested by by others.
So that's one of the benefits I see from this kind of approach to the design of an operating model which makes it different to some of the other processes that I've seen that are kind of around. Just going back to one of the criticisms of that we've heard around operating models is that they're too conceptual, so how do we approach making it kind of quite distilled for people and and how do we approach setting expectations with our clients around kind of how much detail and when is appropriate. Yeah I had a little bit of a chuckle earlier on where you were talking about the one page schematic and that kind of approach and I think that if there was a tip that I could give to somebody who might be embarking on the process to either review or design the operating model, one of the pieces of advice that I think is absolutely critical to offer is that you need to be really clear about the purpose of undertaking the review and for any documents or artefacts that you produce as a result, be really clear how they're intended to be used and what the audience is for them because if you have a look at a range of different operating models and documents created across different organisations, what you'll probably find is that there's a real broad range and some of them less effective than others.
So we typically use three levels of design, we've borrowed that concept from the practise and discipline of architecture in particular where each level of design is intended for a particular audience and goes into a set level of detail and has particular uses that are associated with that level of design. So the three that we use, the first one is the conceptual level, this is a really high level of design, it's typically used or commissioned by senior executives in leadership and more commonly used as an engagement tool, so to have the broad big picture concept conversations with different organisations to start introducing ideas and the notions. The second level of design is known as the logical level and this translates that top level set of concepts into a more specific set of representation, so the additional detail typically enables middle management and operational staff to get greater clarity around what the operating model means for them in their particular roles but this design has other purposes as well, it's quite often used to support the development of business cases and projected costings, so that's one of its intended purposes.
The third level of design is the most detailed level of design and it's called the physical level and in the operating model space these designs are used by those people within the organisation who are tasked with building and implementing the operating model, so they'll include things like the detailed standard operating procedures, the individual roles and position descriptions, setting out their responsibilities, system specifications, even the detailed performance metrics etc. So to give it another example, if we were designing the workforce management approach at a conceptual level it might be the workforce management principles or it might be principles when you might insource or outsource certain functions, so that would be at the conceptual level and then at a physical level it would be the nitty-gritty job descriptions and there's a bit of a range in between but it all depends on what the purpose is and what the client needs and what's appropriate for how they're going to use it. So what we've got on the slide is some tips and tricks for designing operating models and there's a few things that we would recommend, we won't go through all of them but we'll have a bit of a chat about some of them.
So the first one relates to when we're designing operating models we always use a design team, so this is a set group of subject matter experts from a variety of levels from across whatever the scope of the operating model is, so if it's an operating model for an organisation you'd have a range of people from a whole lot of different functions and again at different levels, if it's a business unit or a business group it would include the key people from within that business group but you also might want to include who is the key customers of that business group and the reason why you'd be including them is because you want to understand how is value derived from their point of view, so it's integral into the design of the operation, so you're designing a process that's very very inclusive. I think we've talked in previous pieces of work that if it's really important to include a customer-centric view, so you know your external customers, think about how you're building that into the design of the process, they might not be part of the design group but you'd be including that as an integral part in terms of your current state understanding but also where are your future customers and how are you getting that intel into the process. Yeah I think it's a really important point, capturing the customer voice is one of the real benefits of an inclusive design process and going back to the collective models I mentioned earlier on, inclusive can mean in that instance you're getting representation from across the different organisations, it might mean you're getting community representation, if it's a whanau-centric service then making sure whanau voice flows through as well.
That's a really good point because increasingly we're seeing this you know a bit of an increased awareness around how operating models for systems can really add benefit and can be really effective to pull a whole lot of different entities, agencies, government, community and private sector together around a common cause and how they effectively work together. We've seen a couple of examples where actually by doing that a lot of wastage has come out of the system and suddenly Brian's aligned around what does true value look like. The other tip I think we'd include is you know this whole dynamic around resistance to change.
As we've said before operating models could be a catalyst for change but also as part of the design process you need to be really mindful that there could be some resistance to question the norm or even conceive of something different so you need to design a process that creates the space and that the people as part of the design group have the licence you know to innovate and to really think about what could be different and just be mindful of some of the emotional triggers that could go around it so there's always a little bit of sensitivity so just be mindful of how you're wrapping the right support around the people that are involved in the design group or even the broader programme of work to design and review an operating model. I think that example you used there is really important so I agree with that one. I think there are a range of benefits that you potentially derive from this but that for me reinforces the merits of the inclusive process that you talked about above.
I think when it comes to change and managing any change that might arise from designing a new operating model or implementing it is that if you're using an inclusive process then you're building up a level of intimate knowledge across a range of people from different parts of the organisation. You're then potentially creating people who can go back to their teams, educate their teams, you're potentially creating people who can act as champions for the change. You can use mechanisms which potentially promote and increase ownership of the new ways of working that are envisaged so I think that for me highlights the value of using the inclusive processes.
Nice because I think we keep reinforcing process but if you think about the process to fully interrogate what's happening, where do you want to be, it's that rigour and that evidence and that narrative and that cohesion so of course you want people who understand the intent of how does it all fit together to then go back to their respective areas and help implement it as part of their day job. It's kind of like implementation by stealth. Definitely and I think that knowledge uplift that you talk about that's a basis or that's a mechanism that then allows you to find opportunities for improvement, find opportunities for innovation, to understand how you need to shift or pivot when those environmental factors pop up.
So those are some of the benefits I was alluding to before and that type of approach is the way that you access them. Nice. One of the other tips is anchor in the design of the strategic intent.
Now that actually is a bit of a code form, make sure you've got a strategy. It's not uncommon for us to go in and start working with a client only to find that their strategy is out of date or they don't have a strategy or it's kind of up for grabs and of course how can you have an operating model which is the bridge between strategy and execution if there is no strategy and so we've actually got to start from scratch and actually rehash those conversations so that the strategic direction is really clear and then you can build out the components to deliver it. So make sure that you've got a strategy and that it's endorsed and known.
And then I think lastly is these conversations that you're having around the operating model. How are you adding value? What are the choices you have around adding value and how are you going to deliver value? They're actually quite strategic conversations, they're actually quite foundational conversations and you need to build in the time and the commitment and the engagement to actually have them and land them and you don't want to race through them and then you want to make sure that wherever you're getting to that you've got senior leader commitment around them because they are so fundamental. I couldn't agree more.
So I think that the first thing is take the time to have the conversations. I agree with that. Really important.
So these are the conversations, for instance, for a regulator. These are the conversations that are going to allow the regulator or require the regulator to articulate its regulatory philosophy. It's going to be fundamental then to designing the operating model and have that posture, that philosophy reflected in the rest of the design.
So those conversations are incredibly important and I think to your point about leadership, time and commitment, I agree with that as well. Remember that we talked about, in your previous point, you talked about strategy and earlier on I mentioned that the operating model actually provides you with a translation of strategy into more operational concepts but how the organisation operates as a whole. Leadership are responsible for strategy.
They own strategy. So fundamentally important for them to be heavily involved in the discussions around the translation of that strategy, around the implementation of it. This is a really important part of an organisation's planning hierarchy.
Right, I'm really mindful that that was a whistle-stop tour around operating models. I'm hoping that we met our commitment to really demystify them for you. Right, on to the questions.
So if you've got any questions, please add them into the chat and we'll do our best to answer them. We had a lot of really great questions submitted during the registration, which was great. So we'll kick off with a few of them.
So first one I'm going to throw to you, Anton. What does the operating model look like in the charitable sector when your clients are your service users but founders are the customers? Oh okay, that's not an easy one to start off with. Thank you very much.
So I think it's useful to understand I think that charities, the public and private sector organisations, they all actually have funders and they have clients. In the case of charities it's important that through the operating model design process I think that you're really clear about what your value propositions are. And I think that one of the things that we sometimes don't understand is that public sector and NGO organisations, it's really important for them to have value propositions.
It's sometimes overlooked. So really working hard to define clearly what those value propositions are. I think that we sometimes think that the end user is the only stakeholder who's interested in the value proposition and we architect everything towards that group.
But the reality is that an organisation can develop more than one value proposition and the way to navigate the space is to create clarity about what the value is that you're creating for your funders or the funders expect you to create and then what the value is that you're creating for the end user, the service user, the client. And there is a tension, undoubtedly there's often a tension that you have to maintain and a balance to strike. But if you go through the process of really nutting out what it is that each of those different stakeholders values and the proposition for both, then I think you're in a much better place to design the rest of the operating model and achieve and strike that balance between the two interest sets.
Yeah, yeah. I see that there was quite a few questions that have come through around how do you get buy-in to a new model? How do you get people to change model, change to the new model? And just that whole notion around getting a groundswell of people to kind of adopt a new operating model. I know we've talked a little bit around including people in the process, making it real for people.
Are there any other tips and tricks that we tend to include along the way? Yeah, it is a tricky one and it's a legitimate challenge often because I think generally speaking in the marketplace, there's not a common understanding of what an operating model is. So there's an education piece that we often have to do when we're looking to explore the merit and prosecute the case for going through that review and design process around the operating model. I think being really clear about what problems, you know, we put up the slide earlier on that sort of highlighted some of the operational rubs or triggers and prompts for redesign.
So being really clear what those might be in your organisation and then starting to develop up the benefits that you're trying to unlock and tap into. I think those are some of the really important parts of building and mobilising supporters for undertaking the activity and investing in the process to develop the operating model. Yeah, I know we always talk about as part of our narrative, we always include, you know, what are the shifts, the to to from, where is it going to and how do we make the end state really clear if we're talking about a TOM.
How do you make it really real in terms of when the target operating model is fully mature or fully implemented? What will it mean for staff? So the use of personas, scenarios, anything that will help bring that end state to life and make it clear in terms of what it's going to be different for them as part of their day jobs. Yeah. Let's look at the next one.
If moving away from a top down operating model, how do you manage risk, especially around a lower level of understanding of political context amongst the wider organisation? There's a lot in that question and I'm not necessarily sure that I understand it entirely correctly, but I'll take a punt. If we're talking about moving away from a hierarchical governance structure to a more devolved way of working and a more devolved way of making decisions, then I would say the same approaches that we've described in designing an operating model would apply and I think that devolved decision making models and devolved delivery teams are not in common. We see them quite often, particularly where we're looking to deliver services in place or develop solutions in conjunction with community, for example.
The key things here are about analysing and defining what looks good for your organisation in terms of decision making. So what does a good decision look like? Then you can consider the question, all right, what are the information flows? What are the inputs you need to have to enable that decision maker to make a good decision? And I think in terms of the reference to the political context, you could say, well, what those inputs and the information flow needs to consider is you need to enable the flow of information so that the decision makers understand the context. You probably need to go further to make sure that there is a common enterprise level view as to what the significance of that context is.
So you create mechanisms and forums for communicating or relaying not just the contextual information, but an interpretation of what it means for the organisation. Yeah, so in some ways, if this question is around more like devolved decision making, you're shifting some of the guide rails that would naturally be at the higher order hierarchies and you're lowering them. So what's the capability of staff to make the decisions? What are the guide rails to help them? What are the checks and balances? I think that might be a way to help mitigate some of the risk that is involved.
Yeah, I agree. Yeah. Okay, we'll take some of the live Q&A questions that have come through.
This one is from Steve. So what's the balance between having an op model that is too vague or one that is too detailed? Well, thanks for the pathway, Steve. My first thoughts around that question is that we talked about the three levels of design and I come back to having clarity around what the audience is intended, who's the design intended for, the documents you're creating, who's that intended to be used by and for what purpose? And that, I think, is a really important question to start with.
Quite often, we try and use one document to meet all these different needs. So obviously, sometimes it's going to have too much detail for some people, not enough for others. But if you can get clarity on exactly what you're trying to achieve, what the different documents you're producing are for, you can calibrate those so they meet the specific needs of having the right level of detail, the right information to meet the requirements of your particular audiences.
In some cases, it's not hard to produce two different versions. So the summary level can actually be distilled quite quickly if you've already got a detailed level, although the traditional approach is to come pop out. And it doesn't mean that you need to go detailed on all the different components.
So I know with some clients, we've done a high-level conceptual view and then done a deep dive in terms of one of the specific components that was the most needed. And again, that's what the client needed. That's what was the purpose.
So you had the story, the narrative, how does it all fit together, and the right amount of detail in the right areas. So hopefully, that answers your question, Steve, because it depends. There's a question here from Michelle, Kia ora ANC Teema.
Public sector agencies have undergone extensive challenges in org restructures in the last 12 months with potentially more to come. This has left some with op models and resultant org structures looking a bit like a moth-eaten lace. Great metaphor.
The pace is such that it seems like there is no appetite to breathe, pause, and redesign the op model. What advice would you give to get this on the table? Big. That's quite big.
So it's kind of that process of recalibration, relooking at your foundations. We see this quite a bit when it's kind of now that the dust is settled, what's left? And in some ways, you're going through the process to go, well, where are we now? What is the current operating model? Sometimes those changes are done in a piecemeal way. So you actually don't know how the overall operating model looks.
And if you're a business group, you kind of want to get a sense of how does it all play out now? How do you even get this on the table? Kia ora, Michelle. Ngā mihi mō te pātai. It's a big question.
So I think it is a real challenge. It's very current and not necessarily easy. I think the first thing I'll do about answering the question without answering the question is to say it's easier for organisations to navigate that level of quite disruptive change if they already have formal designs of the existing model or the pre-existing operating model in place.
To respond to those changing factors in the environment, it's been an easier process to understand what levers you're going to pull, what resources you no longer have access to, and how you might reorganise yourself to create the value that you're still tasked with creating. So that is definitely a benefit. Once you've got it in place, you are more agile as an organisation and I think better equipped to understand how you might respond.
In the absence of those formalised designs, at some point there needs to be a commitment to getting the operating model design in in the first place, because there's still an expectation, still a requirement that you're going to create value. And in this environment, particularly when it is resource constrained, but there's also heightened competition for limited resources, you want to be able to put your best case forward to be deserving of accessing those resources. That means you need to be clear about what value you're going to create and how you're going to be able to create it.
That narrative needs to be influential and compelling enough that funders will want to provide you with the resources that you're seeking. So I think at some point there is a bite the bullet kind of element to the response that's not, I don't think, necessarily the ideal answer, but in some ways that's the reality. But once organisations commit to it, you can actually develop the operating models at pace and you can find the ways of maximising your impact and the value you're trying to create, recognising that you may have limited resources in what those are.
So getting to the point where you understand how to best deploy those resources, how to best organise those resources, those kind of decisions are still available to you through that operating model design process. Yeah, and if we go back to, I'm really mindful of, you know, if operating model is the bridge between strategy and operations and suddenly you've got potentially either a new strategy that's been left because of the restructure, in some ways even just going through those key design questions that re-looking at your operating model will help and getting those on the table. So given the new capability, given the new mandate, what are the strategic choices that need to be in play? How do you create value with those resources? What are the right capabilities? In some ways you've got a, already got a bit of a mandate to start asking those questions.
So while it's not about, you know, creating the artefact, because an artefact is just one element, it's what are the conversations, what is the, yeah, what is the conversations that need to go around that the leadership team should be asking in order to implement the new strategy? Yeah, definitely. I think the benefit available is that you go through those, so revisiting those discussions and considerations around how you create value, those are the conversations and considerations that will allow you to tap into new ways of doing things. Those are the things that will allow you to find those innovation opportunities and those innovation opportunities are potentially the ones that allow you to do more with less.
And so the committing to the process, I think, is still the best way forward in tapping into those benefits. The final point that I was making, you did say that this was a big question, there was a lot in there, so this is a long-winded answer, I apologise. But the final thought that I have on this is that we're in an environment where there are lots of disruptive forces at play.
In the course of the last five years, we've had a pandemic, we've had geopolitical events occur that have impacted our economy. We now have the current wave of those geopolitics with the tariffs unfolding. So the disruptive factors that we have to grapple with as organisations, the cadence of them is actually increasing.
You mentioned AI earlier on, so the impact of these things is actually quite significant and we're not necessarily suggesting that that's going to settle down anytime soon. The importance, therefore, for these organisations is that we need to be able to respond as quickly and effectively as we can to changing circumstances. And that's the benefit that formalised operating models allow.
So even though we're in a challenging position, getting to the point where we've articulated the model, we've intentionally designed it, it puts us in a position to be much more agile, to navigate future change. So I think there's a lot of merit in still pursuing the formal design process, even though conditions are really challenging. Yeah, yeah.
So this is from Chez. Is there a hack for understanding upfront whether a centralised approach or a devolved approach to the model is appropriate? Which is very similar to what we were talking about earlier in terms of delegated decision making, but in terms of a decentralised versus a centralised approach to a structure. Any thoughts? I'm not sure that I've got a hack for that one necessarily, but I do think that you come back to the value and what the value is that you're trying to create, come back to understanding what some of the operational challenges and opportunities might be.
Generally speaking, centralised models, traditional models, invariably designed because we like to have centralised control. Devolved models often work where we're either geographically dispersed or we have discrete teams who are working on highly technical or discrete pieces of work, not a lot of commonality across the organisation. So having decision making vested in that part of the operation makes a lot of sense.
But if you're in a situation where fundamentally there's lots of operational overlap, lots of repeating patterns across different teams, then the centralised model can work quite well and effectively. But again, just coming back to understanding and analysing what works best in any given scenario. Nice.
Where the strategy is a 20 to 30 year view and the op model is forced into a reactionary state, what guardrails can be used to keep complex organisations on track? Yeah, this is a good question. Long term strategies setting out the aspirations for the organisation over 20 to 30 years, they often benefit from doing further planning. So planning out the stepping stones from getting essentially from where we are today to that ultimate goal, which is a horizon 20 to 30 years out.
So one of the ways that organisations can achieve that is, yeah, we have our vision, we're looking to achieve that over 20 years. But from where we are today, we're going to develop a plan that gets us to out five years. And these are the activities that we're, or the goals we're going to achieve over the five years.
Operating model designers in us can be architected in a similar way. So we can actually look at a time, the future operating model and define where we think that needs to be to enable us to get to that five year point. Then we can adopt the cadence of review, refresh and replan to continuously reorient the operating model or refresh the operating model so that it's always fit for purpose, but we've got the next five year horizon in our sights.
And that way we can progressively make our way out to that 20 or 30 year horizon. I think importantly, then you're not having to fall into a reactive state, you're being proactive with your planning at both the strategic level, as well as the operating model level. We've got a question around how do ethnic or ethics and religious beliefs impact on operating models? I've been talking a lot.
I know, I know, I know. So this is a really big question because I'd say actually religious beliefs or your ethics would actually permeate through all of your operating model. It would define how you create value.
It would create what capability is required, your delivery channels. It could have implications on things like pricing structures, revenue models, sorry, delivery models. So if I think about World Vision, Christian-based aid organisation, they are really deliberate that their partnership approach to delivering aid is through a Christian-based delivery model.
Their partnership model is very much based around working with organisations and local areas that actually meet or fit their values and ethics. Whereas some other aid organisations will be more agnostic around who they engage with in local areas. And it's very much a localised response.
Yeah, I think going back to the approach we described earlier on with the four lenses, because there is that culture lens, your belief system is an inherent part to designing the operating model. This is a question from Janet. It can be overwhelming when as well as a strategy and operating model, there is also work going on and looking at functions and capabilities for an organisation.
Do you have a picture for how all these fit together and if there is a best order to create these in? So yes, there is a picture. At the very beginning of the webinar, we had how the strategy is at the top of the pyramid. The operating model fits between strategy and implementation planning.
And typically you'd see functional and capability design would be subsequent to an operating model, because usually functional and capability design is focused on a business group. And usually you want the narrative and the cohesive rigour that goes around the design of an operating model, which talks about the how, how do all the components fitting together to be an input into the functional design and the capabilities that are required. In some ways, the operating model will answer the higher order questions that will inform the functional and capability design.
So hopefully that's a quick fire question. A couple of questions from Sarah. You mentioned that an op model is a tool to help us focus on the how we work.
Do op models typically also look at the what we work on? Yeah, that's an interesting question. And I think, yes, they can. Insofar as an op model can help organisations understand and articulate what things are most important to them.
So that the prioritisation mechanisms that traditionally sit within that governance lens that we talked about, in terms of the way of working, that is definitely an element that they can support with. Yeah, and I think it's about levelling. So I'd say, you know, is it your base level prioritisation tool? No.
But the higher order conversation around how do you add value, what kind of work adds value, and then how does it all line up? Yes. So it might be the levelling element. And then she's got a second question.
Do you have advice on timeframes for implementing an op model? EGF, an organisation, has gone through a long period of change restructure, recently reviewed a strategic framework and is now turning its attention to strategy implementation. To what extent should the op model be progressed at pace to implement the necessary changes? I think that's another one of it depends how much change is involved. And what's the pathway for change? I've been part of some really radical, large transformational changes where the entire model has changed.
And you know, that's at least a five year journey to and I call it maturing the op model. It's quite unusual that depending on what the changes are, that you would shift from your current state to the new operating model or the tom kind of overnight, because usually people are talking about a new structure when they think we've implemented. And they say we've implemented the new target operating model, or the new operating model.
And actually, all they've done is just, you know, it's a new structure takes place, because we all know it takes time to be done. So it depends on the size of the change. And what is the other change that is going around it? If you're thinking about the operating model as a cohesive whole.
So you're really maturing the ways of working, building a new culture, you know, it's got to take time to fully embed and mature. It's not a, you know, we can forget or, you know, because you've got a new document or a new structure. Yeah, I agree.
There's that, that analytical piece that you do at the front end to sort of say, this is our current state. This is the target operating model, the tom. And you know, what's the nature of the shifts that you need to make to get from where you are today to where you want to be from an operating perspective, the significance of those shifts will influence to a large degree, the pace of implementation, how much you're taking on how many tranches of capability you need to develop and deploy, and what kind of hard frames reasonable.
So, yeah. In large complex public service organisations, how do you make good decisions around what operating models you need? I.e. an organisational level model is too conceptual to guide specific functions, but too many operating models for different functions can lead to silos and disconnect. What's the balance? That's a great question as well.
I think you know, and we're coming, there's a few questions emerging which are about the pitch and the level. And we come back to that first order, the first principle that we talked about, which is understanding the utility that's required in the audience. So I think answer that question in the first, first and foremost.
There are ways of designing a high level operating model, which is potentially conceptual, but doing it in such a way that it has sufficient guides and anchor points for the lower level designs to get the cues that they need to understand how they're supposed to design the functional level elements. So I think there are ways that you can do it, but being really clear about what you need to see in the operating model design, what level of pitch you require, that's one of the key elements. There is a question here from Richard.
So how can organisations ensure successful implementation of an agreed, cohesive target operating model, while also allowing for appropriate adjustments in response to the ongoing changes, i.e. policy environment? I actually tend to think you need to be really mindful of what's your total change capacity. So your capacity and capability for change, implementation of a target operating model is basically your change work programme. And how do you balance that out? Because you've also got to deliver BAU.
So I'd be looking at the total capacity and capability for change, which allows you to make progress. It might mean that you might need to slow up certain parts, while carving out a bit of change capability to allow for the it's almost like BAU change, because there is always some reactionary change that needs to happen, especially within a policy environment or a government agency. So it's getting the right balance of change while making progress and monitoring it.
The last thing you want to do is be putting all your emphasis, all your eggs in one bucket, and then kind of doing a stop and start approach to your change programme. And then I think the last question, when you design an op model, do you take a completely fresh approach? Or do you redesign an existing op model? So I think that, you know, if I were to coin one of your phrases, that this is a depends answer. But in some ways, it does depend on whether you're just doing a review.
So if you have a sense that there are minor changes in the operating environment, minor contextual factors, broadly speaking, you feel that the organisation is generating the value that it wants to, or having the impact it wants to, then the answer might be that you're taking a lighter touch type of approach. If however, there's been a fundamental shift in strategic direction, fundamental shifts in the environment, the operating environment, or we know clearly that the organisation is not creating the value that it needs to create, then there's a case to be made for a much more substantial review and definitive case for redesign. I think that the key is, if you're an organisation that needs to be innovating, and finding new ways of working, that you want to open yourself up to really exploring the ways that you can conduct yourself, the ways that you can create value and have impact to challenge some of the status quo and find those new and improved ways of working.
So that's some of the considerations, I guess, that come to mind for me. And in some ways, you want to be almost agnostic at the beginning of the process, because you're going through a discovery period of going, well, what's actually happening as part of your current state analysis compared to your strategic ambition. And you almost don't want to have that, should we just refine or is it a new one at the beginning, you kind of want to see what the discovery period and the diagnostic approach actually illuminates.
What you think might be, yeah, it's actually we're going okay. But given the strategic direction and the market forces in play, you might actually need a completely new operating model, or at least discuss the possibility of an alternative one, because it might come down to the appetite of leadership to really go there. But at least you've done the due diligence and you've been deliberate around the strategic choices that it will take to deliver that strategic ambition.
So it depends. Unfortunately, we've run out of time to answer all of the questions today. We are happy to catch up with you at any time to answer any insights, any questions that might arise, or even discuss potential ideas that you might have.
If you're interested in any of the other webinars, there is a load of other webinars that are on the Allen and Clark website. So please go check them out. Well, that's us.
Ngā mihi for joining us and we'll see you at the next webinar.
